Your clients will get the following letter when you change to a new firm:

Issues to consider when your broker changes firms
You’re receiving this notice because your broker has changed firms. If you’re thinking about whether to follow your broker or stay with your current firm, it’s a good idea to examine key issues that will help you make an informed decision. A good relationship with your broker is surely valuable to you, but it’s not the only factor in determining what’s in your best interest.
Before making a final decision, talk to your broker or someone at your current firm about the following questions, and make sure you’re comfortable with the answers.

Could financial incentives create a conflict of interest for your broker?
In general, you should discuss the reasons your broker decided to change firms. Some firms pay brokers financial incentives when they join, which could include bonuses based on customer assets the broker brings in, incentives for selling in-house products or a higher share of commissions. Similarly, some firms pay financial incentives to retain brokers or customers. While there’s nothing wrong with these incentives in either case, they can create a conflict of interest for the broker. Whether you stay or go, you should carefully consider whether your broker’s advice is aligned with your investment strategy and goals.

Can you transfer all your holdings to the new firm? What are the implications and costs if you can’t?
Some products, such as certain mutual funds and annuities, may not be transferable if that’s the case, you’ll face an additional decision if you follow your broker to the new firm: whether to liquidate the non-transferable holdings or keep just these holdings at your current firm. Either way, there couId be costs to you, such as fees or taxes if you liquidate,
or different service fees if you leave some assets at the current firm. Your broker should be able to explain the implications and costs of each scenario.

What costs will you pay, both in the short term and ongoing if you change firms? In addition to liquidation fees or taxes if you sell non-transferable assets, you may have to pay account termination or transfer fees if you close your current account , or account opening fees at the new firm.(Even if the new firm waives its fees as an incentive to transfer, that wouldn’t reduce any transfer or closure costs at your current firm.) Moving forward, the new firm may have a different pricing structure for maintaining your account or making transactions (such as fee-based instead of commissions ,or vice versa),which could increase or lower your account costs.Your broker should be able to explain the pricing structure of the new firm and how your ongoing costs would compare.

How do the products at the new firm compare with your current firm?
Of course, not all firms offer the same products. There may be some types of investments you’ve purchased in the past or are considering for the future that aren’t available at the new firm.
If that happens, you should feel comfortable with the products they offer as alternatives If you tend to keep a lot of cash in your account, ask what investment vehicles are available at the new firm for the cash sweep account and whether the interest rate would have an effect on your return.

What level of service will you have?
Whether you follow your broker to the new firm or choose another broker at your current firm, consider whether you’ll have access to the types of service, support and online resources that meet your needs.

Merrill Lynch recruited a team from Morgan Stanley that managed $1.2 billion in client assets.

The nine-person team, led by Bruce Munster, generated $5.8 million in annual revenue while at Morgan. They join Merrill’s elite Private Banking & Investment Group in Century City, Calif., where they report to Michael Rogers, managing director.

A top producer, Munster was recently featured as No. 7 in On Wall Street’s annual ranking of the Top 40 Advisors Under 40.

Excluding the players in the World Series, there are many contenders for a baseball list that no one wants to be a part of…..

The toughest question for the general manager of any baseball team is whether to pull the trigger and offer a player coming off a big year a huge contract. No matter what fans think there’s no way to tell for sure if a player will continue at the top of his game after re-signing. The World Series features two teams, the Kansas City Royals and the San Francisco Giants, who eschewed off-season splurges and relied on smaller contracts and young, untested, players — particularly the Royals.

What can you tell me about yourself?

“Perhaps the oldest job interview question, but it’s still the most powerful. While prior measured accomplishments are the best predictor for future success, this open-ended question separates the great FA from the merely good FA. A good response gives me a glimpse of the candidate’s poise and communication skills. I want to learn about their work ethic, vision, passion, family, humility, community involvement, goals, stability, etc. The best response includes language about serving clients. The worst response is non-communication, uncomfortable silence, folded-arms, and defensiveness.”

The question isn’t whether or not FINRA and the SEC will require financial advisors to disclose the details of their compensation packages when they switch firms. The big question isn’t, “What will my clients think if they know how much money I’m earning to move my book of business?” Similarly, spending your time wondering what the maximum compensation you can receive as a recruitment bonus -without having to disclose it- is frankly, a waste of time.

Those questions are soon going to be an exercise in futility, as all indications are that the days of enhanced compensation, big bonuses and upfront cash to attract top producers may be going the way of the dinosaurs.
As such, the only question on any FA’s mind should be “When is this coming, and should I make a change now before the big deals dry up?” Because it’s not a question of whether or not the big recruitment deals are going to lose steam, it’s just a matter of how quickly they will begin drying up.
The reasons are varied and go beyond any new disclosure rules, and the wirehouses are publicly speaking up about their difficulties fulfilling the massive compensation packages they guaranteed. Make no mistake, for the past couple of years even the powerhouse firms have faced an uphill battle to keep their extravagant promises. That means that the 300%+ deals (and closer to 400% if deferred comp is matched) days’ are probably numbered. The 150% upfront cash proposals are not likely to survive the change. The days of buying FA’s out of their current contracts are simply no longer feasible.

The major factor that has driven deals up to their current exalted levels is the intense competition for a shrinking talented advisor population. Supply and demand has always ruled. But here’s the spoiler alert: these days it doesn’t look like we are very far off from the major wirehouse firms making a pact of sorts, to cap the recruitment deals. Recruiting has proven to be incredibly expensive for all of the players involved.
The major firms do in fact speak to each other, as evidenced by the Broker Protocol Agreement (2004) designed to stop the legal battles and temporary restraining orders that ensued when brokers jumped to a new firm. Prior to this agreement, the legal bills from all sides were, if you recall, ridiculous.

Although mergers, acquisitions, and the fickle nature of the industry had, at one point led many of the big players to offer attractive retention packages, these days it looks as if those may be going by the wayside as well. Brokerages seem to not only be tired of chasing one another’s top producers, they are tired of having to pay hefty retention fees, and recent statistics show that they aren’t necessary any longer. Turnover is down at all of the wirehouse firms.

At first glance this apathy towards retention and recruitment might look like it would lead to more turnover. Yet, there isn’t likely to be as much incentive to switch firms, if the monetary incentives just don’t exist anymore.
Please understand that recruitment deals will never entirely go away, but it’s today’s top deals that will be challenged. Whether the big deals start to dry up in 2014, or 2015, is anyone’s guess. But rest assured, they are poised to decrease over the coming months and years.
So if you’re an FA looking for a big recruitment bonus, it’s best that you make a move sooner than later. Because things are about to change, and the clock has already started ticking…with big recruitment deals living on borrowed time.

Michael Wasserman & Associates is Ready to Help
“Accept nothing but the best… and you’ll get it!”

Morgan Stanley Smith Barney has announced that John J. Mack, Chairman, will step down at the end of the year. James Gorman will replace Mr. Mack.

Mr. Mack, 66, is a well known Wall Street leader. He has worked for Morgan Stanley for many years, starting as a bond salesman and eventually became the firm’s president. John Mack left the firm in 2001 after a dispute with Philip Purcell.

Mr. Mack became chief executive at Credit Suisse First Boston, and then later became CEO of the parent company, Credit Suisse Group.

According to an article in On Wall Street magazine, Mack said, “Helping to lead this great firm, most recently as Chairman, was the greatest honor of my career. However, I made clear back in 2009 that I would serve in the Chairman role for two years and then move on. Now that time has come.”

Presently, James Gorman is the chief executive officer and president. Morgan Stanley’s board of directors has elected him to Chairman effective January 1, 2012 in addition to his present titles. This was an expected change.

Whatever happened to the stampede to indie from the wirehouses? According to an article in Registered Rep magazine, “the switch from the wirehouse model to independence will be an ongoing but slow trend. Cerulli Associates expects the wirehouse channel to lose 1 to 2 percent of its market share of assets per year.”

So, who is going independent? According to the survey in the Registered Rep article; the average IBD has about 19 years in the business, about $ 47 million in AUM and an average production of about $ 360,000. The article points out that there are two types of advisors that are leaving the wirehouses and going independent. “The first kind are advisors who are essentially encouraged to leave,” due to low production quotas.

The second type of advisor going independent is a FA with a well-established professional practice who desires to have more control of his practice. This FA also has a sizable practice without any problems of generating any revenue.

The data from Cerulli Associates suggest that the migration to the indie side does continue, “but it’s a trickle rather than a flood.” The wirehouses need to remain vigilant about recruitment because a trickle of water soon becomes a stream and the stream a torrent, and the torrent a flood.

Bank of America has announced that they will hire 500 additional Financial Solutions Advisors (FSA) by year-end. These FSAs represent Merrill Edge, the platform built to combine the banking strength of Bank of America and the investment strength of Merrill Lynch. The FSAs will be located in select banking centers, including Los Angeles, San Francisco, New York, Washington D.C., Dallas & Charlotte. The FSAs will serve Bank of America’s preferred customers that have between $ 50,000 and $ 250,000 of investable assets. According to Bank of America, there are 8 million investors in this category and they have total assets worth more than $ 5 trillion.